On Ethics and Leadership
One of the occupational hazards of watching trends is disillusionment, if not actual cynicism. It’s easy to fall into the trap of reading some inspiring article on a deep social or business problem and thinking, “Well, I’m glad there are such bright people looking hard at this and working to resolve it. We’re going to make quick progress on how to handle this.” Later, of course, we’re often forced to recognize that progress has occurred only at a glacial pace, if at all.
Consider the problem of unethical business behavior, especially among leaders. Earlier this year, Executive Speeches magazine published a speech delivered back in 1987 by Willard C. Butcher, former chairman of the Chase Manhattan Corporation. Nearly two decades ago, he thought there had been a decline in ethics and ethical leadership. He noted, for example, that “ethical abusers often are treated more like celebrities than pariahs,” an observation that makes one wince in response to today’s almost instant rehabilitation of Martha Stewart’s reputation.
Then there is Butcher’s comment about how then-Education Secretary Bill Bennett (who years later was subjected to criticism by the press due to his gambling habits) thought ethics should be taught in universities in “a serious way.” Today, of course, the debate still continues about how universities, especially MBA programs, should integrate ethics into curricula.
But perhaps Butcher’s most important and timeless point is that “ethical behavior and effective leadership are intertwined and inseparable.” In recent years, this point has been reinforced both by the plague of business scandals implicating top leaders and a variety of academic studies and surveys. A 2004 Booz Allen Hamilton and Aspen Institute global survey of senior executives, for example, shows that the single most widely cited as well as most effective management practice for reinforcing organizational values is to gain explicit CEO support (Van Lee, Fabish, & McGaw, 2005).
Another recent study, The National Business Ethics Survey ( Harned, Seligson, & Baviskar, 2005), found that corporate culture is more important than actual ethics programs when it comes to creating an ethical workplace, and leadership is crucial to culture. A press release on the survey notes, “Employees in organizations with a weak ethical culture reported a much higher level of observing at least one type of misconduct than employees in an organization with a strong ethical culture (70% compared to 34%).” Ira A. Lipman, chairman and president of Guardsmark, LLC, the principal sponsor of the survey, noted, “Top corporate leaders must make ethics a very high and serious priority, not only within their own organizations but throughout the business world.”
The good news for leaders is that most employees either agree (51%) or strongly agree (32%) that their top managers set a good example in terms of ethical conduct. And fully 87% of respondents either agree or strongly agree that their supervisors set an ethical example (pp. 62, 65).
The not-so-good news is that a lot of leaders still have more work to do in nurturing a culture of ethics. The survey finds that, since 2003, there’s been a slight increase in the percentage of workers who have witnessed at least one case of misconduct at work and there’s been a decline in the percentage who report misconduct to managers.
Another cause for concern among leaders is that employees aren’t as likely to think their top bosses are displaying “ethics-related actions” as the bosses themselves are. Employees just don’t trust top management as much as they do people at other levels of the organization. Yet, top managers have the biggest impact on ethical outcomes (p. 75). “In my opinion, any normative change in a corporation starts with the CEO,” notes social trend analyst Daniel Yankelovich (Kleiner, 2005).
Leadership actions are, of course, essential. Leaders not only need to talk about ethics but walk that talk. What’s on their minds, however, is also important. Some experts believe today’s leaders have become too focused on bottom-line issues for their own – and their company’s – good.
A study of 228 UK companies, for example, found that a corporation’s purpose becomes more meaningful to workers if it’s tied to customers or multiple stakeholders rather than just shareholders (Springett, 2004, p. 303). It also found that corporate values had a big impact on employee trust of leaders, the perceived value of those leaders and their perceived integrity. In firms focused exclusively on shareholder value, nearly half of respondents considered their strategic leaders to be poor or very poor. In contrast, the same was true for just 14% in customer-focused companies.
So, maybe today’s top leaders can help their corporate cultures become more ethical if they stress values beyond just maximizing returns. “When a leader loses touch with his own values, he loses important tools for leading,” writes Kathy Whitmire (2005), former mayor of Houston, Texas. She advises leaders to not only articulate and exhibit the values important to themselves but to recruit and empower other leaders who share those values. Leaders must also clarify priorities when there’s a conflict of values in their organizations. By doing this, business might make faster progress in the area of ethics, even if we are still discussing some of these problems in another 20 years.
For more on the National Business Ethics Survey and the Ethics Resource Center, click here.
Documents used in the preparation of this TrendWatcher include:
Butcher, Willard C. “The Need for Ethical Leadership.” Executive Speeches. ProQuest. April/May 2005.
Ethics Resource Center . “ Survey Documents State of Ethics in the Workplace.” Press release, October 12, 2005.
Harned, Patricia J., Amber Levanon Seligson, and Siddhartha Baviskar. National Business Ethics Survey: How Employees View Organizations 1994-2005. Washington, DC: Ethics Resource Center, 2005.
Kleiner, Art. “Daniel Yankelovich: The Thought Leader Interview.” strategy+business, Fall 2005, pp. 91-97.
Springett, Nigel. “Corporate Purpose as the Basis of Moral Leadership of the Firm.” Strategic Change, September/October 2004, pp. 297-307.
Whitmire, Kathy. “Leading Through Shared Values.” Leader to Leader, Summer 2005, pp. 48-54.
Van Lee, Reggie, Lisa Fabish, and Nancy McGaw. “The Value of Corporate Values.” strategy+business, Issue 39, 2005, pp. 1-14.
Consider the problem of unethical business behavior, especially among leaders. Earlier this year, Executive Speeches magazine published a speech delivered back in 1987 by Willard C. Butcher, former chairman of the Chase Manhattan Corporation. Nearly two decades ago, he thought there had been a decline in ethics and ethical leadership. He noted, for example, that “ethical abusers often are treated more like celebrities than pariahs,” an observation that makes one wince in response to today’s almost instant rehabilitation of Martha Stewart’s reputation.
Then there is Butcher’s comment about how then-Education Secretary Bill Bennett (who years later was subjected to criticism by the press due to his gambling habits) thought ethics should be taught in universities in “a serious way.” Today, of course, the debate still continues about how universities, especially MBA programs, should integrate ethics into curricula.
But perhaps Butcher’s most important and timeless point is that “ethical behavior and effective leadership are intertwined and inseparable.” In recent years, this point has been reinforced both by the plague of business scandals implicating top leaders and a variety of academic studies and surveys. A 2004 Booz Allen Hamilton and Aspen Institute global survey of senior executives, for example, shows that the single most widely cited as well as most effective management practice for reinforcing organizational values is to gain explicit CEO support (Van Lee, Fabish, & McGaw, 2005).
Another recent study, The National Business Ethics Survey ( Harned, Seligson, & Baviskar, 2005), found that corporate culture is more important than actual ethics programs when it comes to creating an ethical workplace, and leadership is crucial to culture. A press release on the survey notes, “Employees in organizations with a weak ethical culture reported a much higher level of observing at least one type of misconduct than employees in an organization with a strong ethical culture (70% compared to 34%).” Ira A. Lipman, chairman and president of Guardsmark, LLC, the principal sponsor of the survey, noted, “Top corporate leaders must make ethics a very high and serious priority, not only within their own organizations but throughout the business world.”
The good news for leaders is that most employees either agree (51%) or strongly agree (32%) that their top managers set a good example in terms of ethical conduct. And fully 87% of respondents either agree or strongly agree that their supervisors set an ethical example (pp. 62, 65).
The not-so-good news is that a lot of leaders still have more work to do in nurturing a culture of ethics. The survey finds that, since 2003, there’s been a slight increase in the percentage of workers who have witnessed at least one case of misconduct at work and there’s been a decline in the percentage who report misconduct to managers.
Another cause for concern among leaders is that employees aren’t as likely to think their top bosses are displaying “ethics-related actions” as the bosses themselves are. Employees just don’t trust top management as much as they do people at other levels of the organization. Yet, top managers have the biggest impact on ethical outcomes (p. 75). “In my opinion, any normative change in a corporation starts with the CEO,” notes social trend analyst Daniel Yankelovich (Kleiner, 2005).
Leadership actions are, of course, essential. Leaders not only need to talk about ethics but walk that talk. What’s on their minds, however, is also important. Some experts believe today’s leaders have become too focused on bottom-line issues for their own – and their company’s – good.
A study of 228 UK companies, for example, found that a corporation’s purpose becomes more meaningful to workers if it’s tied to customers or multiple stakeholders rather than just shareholders (Springett, 2004, p. 303). It also found that corporate values had a big impact on employee trust of leaders, the perceived value of those leaders and their perceived integrity. In firms focused exclusively on shareholder value, nearly half of respondents considered their strategic leaders to be poor or very poor. In contrast, the same was true for just 14% in customer-focused companies.
So, maybe today’s top leaders can help their corporate cultures become more ethical if they stress values beyond just maximizing returns. “When a leader loses touch with his own values, he loses important tools for leading,” writes Kathy Whitmire (2005), former mayor of Houston, Texas. She advises leaders to not only articulate and exhibit the values important to themselves but to recruit and empower other leaders who share those values. Leaders must also clarify priorities when there’s a conflict of values in their organizations. By doing this, business might make faster progress in the area of ethics, even if we are still discussing some of these problems in another 20 years.
For more on the National Business Ethics Survey and the Ethics Resource Center, click here.
Documents used in the preparation of this TrendWatcher include:
Butcher, Willard C. “The Need for Ethical Leadership.” Executive Speeches. ProQuest. April/May 2005.
Ethics Resource Center . “ Survey Documents State of Ethics in the Workplace.” Press release, October 12, 2005.
Harned, Patricia J., Amber Levanon Seligson, and Siddhartha Baviskar. National Business Ethics Survey: How Employees View Organizations 1994-2005. Washington, DC: Ethics Resource Center, 2005.
Kleiner, Art. “Daniel Yankelovich: The Thought Leader Interview.” strategy+business, Fall 2005, pp. 91-97.
Springett, Nigel. “Corporate Purpose as the Basis of Moral Leadership of the Firm.” Strategic Change, September/October 2004, pp. 297-307.
Whitmire, Kathy. “Leading Through Shared Values.” Leader to Leader, Summer 2005, pp. 48-54.
Van Lee, Reggie, Lisa Fabish, and Nancy McGaw. “The Value of Corporate Values.” strategy+business, Issue 39, 2005, pp. 1-14.